RPT-Pound flash crash sends FTSE higher, gilts down

LONDON Oct 7 (Reuters) - Sterling plummeted as much as 10
cents in just a few minutes of Asian trading on Friday, a "flash
crash" that fuelled concerns about the vulnerability of the
British currency while adding to the allure of the country's
corporate sector.

The pound recovered from the fall, which took it as low as
$1.1491 and was driven, dealers said, by the automated
algorithmic computer trades that now dominate the global foreign
exchange market.

But it was still down 1.4 percent on the day and trading
below $1.25 for the first time since 1985.

Gains in shares of internationally focused UK firms, which
boost overseas revenues and competitiveness every time the
currency falls, drove the FTSE 100 index half a percent
higher while other European stock markets fell.

Sterling's battering, however, added to pressure on UK
government bonds, pushing 10-year gilt yields 9 basis points
higher to 0.951 percent, their highest since the days after
Britain voted to leave the European Union on June 23.

"We can dismiss what happened in Asia, but the bias for
sterling's performance remains downward," said Neil Mellor, a
currency strategist with Bank of New York Mellon in London.

"The speech by (Prime Minister Theresa) May this week thrust
the prospect of a 'hard' Brexit upon the market. The fact is
that the bias to the downside is going to remain there until we
see some details from the negotiating table."
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